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2013 Filing Season – Make the Most of the New Individual Deductions and Credits

Posted Feb 13, 2014

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There are a few new deductions and credits for this tax season, outlined below. In addition, if you’d had any sort of unusual event during the year (marriage/divorce, birth of a child, adoption of a child, new home purchase or refinancing, new job, retirement, etc.) please alert us to your news before we start preparing your return. There are many opportunities related to these types of events that can reduce your tax bill.  

Simplified Home Office Deduction 

Beginning in tax year 2013 (returns filed in 2014), taxpayers may use a simplified option when figuring the deduction for business use of their home. Note: This simplified option does not change the criteria for who may claim a home office deduction. It merely simplifies the calculation and recordkeeping requirements of the allowable deduction.

Highlights of the simplified option:

  • Standard deduction of $5 per square foot of home used for business up to a maximum of 300 square feet (max deduction of $1,500 for 2013).
  • Schedule A deductions such as mortgage interest and real estate taxes are still allowable in full (100%), in addition to simplified home office deduction.
  • If the simplified deduction is elected, depreciation is not taken for these years
  • You do not have to permanently elect to do the simplified method; if you elect the simplified this year, you have the option to elect the full schedule next year, and vice versa
  • If you wish to read more on this topic, please visit the IRS FAQs guidance published on the simplified home office deduction, found here, or consult your tax advisor.

 

Arizona Credits 

Arizona credits reduce your Arizona income tax liability dollar-for-dollar; additionally, you may deduct these contributions on your Federal return if you itemize. As a result, supporting eligible schools and charitable organizations in Arizona provides taxpayers the opportunity to “move” their tax dollars from the Arizona Department of Revenue to their selected charitable organization, provided certain limits.  A wide variety of charities (plus most donations to umbrella organizations such as the United Way) will qualify for the credit. Read more on the list of qualifying organizations and guidelines here.

The three most popular 2013 Arizona tax credits that we encourage all taxpayers who itemize to take advantage of are:

  • Charitable Organizations Credit (formerly called the Working Poor credit)*
    • $200 maximum if single/head of household
    • $400 maximum if married filing joint
    • Credit for Contributions to School Tuition Organizations**
      • $1,031 maximum if single/head of household
      • $2,062 maximum if married filing joint
    • Credit for Contributions Made or Fees Paid to a Public School
      • $200 maximum if single/head of household
      • $400 maximum if married filing joint

The Working Poor credit has now been renamed the Charitable Organizations Credit.

*New for 2013 (and continuing into 2014), you no longer need to itemize in order to claim the Charitable Organizations credit.  As a result, even if you don’t plan to itemize, be sure and provide your donation receipts to us to ensure all available credits are claimed.

The Charitable Organizations credit has also been expanded to include organizations that support eligible foster care organizations in 2013, so that up to $800 (MFJ) may be claimed if taxpayers donated to a qualifying foster care organization in addition to another qualified charitable organization.

**Note that Tax Credit Donations to Private School Tuition Organizations can still be made in 2014 for the 2013 tax year (deadline is April 15, 2014), however, please note that these deductions cannot be taken on your federal return until 2014.





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